Property market shows recovery signs after Brexit vote

The housing market is showing signs of a post-referendum pick-up heading into autumn as it recovers from “paralysis” in the immediate aftermath of Britain’s decision to quit the European Union.

As the UK counts 100 days since the Brexit vote, experts believe that buyers are now moving forward and getting on with their lives, breathing new life into the property market.

Bank of England figures showed that during July, in the weeks after the vote had taken place, the number of mortgage approvals being made to homebuyers plunged to its lowest level in a year-and-a-half.

But in signs that activity is lifting, the Council of Mortgage Lenders (CML) recently reported that mortgage lending rebounded in August - and the body said fears voiced in recent months about the housing market have “proved to be wide of the mark”.

Simon Rubinsohn, chief economist at the Royal Institution of Chartered Surveyors (Rics), said: “The vote was a surprise, and what you found was that there was, as is often the case with a shock to any market, there’s a degree of paralysis that creeps in.

“It’s understandable, because people are making a very big decision with buying a house and they don’t know many things, they don’t know what that means for interest rates, they don’t know if there’s going to be mortgage funding around, they don’t know whether it means there’s going to be job losses, job gains - these sorts of uncertainties are always associated with big, political events.”

Mr Rubinsohn said swift action from the Bank of England had helped to support confidence.

He continued: “What we’ve seen in our last survey in August is a more stable trend in activity - so we saw sales agreed stop falling and stabilise.

“We also saw buyer enquiries beginning to steady, having fallen for a couple of months. So that’s a signal that perhaps people are no longer getting more and more worried, they’re beginning to see some light and they think that there is perhaps a bit more opportunity.”

He said what came out “loud and clear” from comments in Rics’ August survey was that underlying factors in the market had returned to what they were before the referendum - with surveyors reporting concerns over a lack of stock and tax issues for investors.

Mr Rubinsohn said the full impact of Brexit on the economy may not be known for up to two years - “possibly even more”.

Asked if he thought some people may just have decided to get on with their lives, he said: “I think that’s absolutely right ... What dawned on people over time was actually that Brexit is a drawn-out process. It isn’t going to happen overnight.”

He continued: “People have just said: ‘Let’s get on with things.’ That doesn’t mean that we’re going to see a sharp uplift in activity but I think we are going to see a pick-up in activity over the coming months.”

Mr Rubinsohn said the first three months of 2016 had already seen strong activity as buy-to-let investors rushed to beat a stamp duty hike that came into force for this sector on April 1. Many of the homes snapped up before the tax hike may otherwise have been purchased later in the year.

He said: “The second quarter was always going to be a softer quarter.”

And house price expectations have now started to pick up “in most parts of the country,” he said.

Mark Hayward, managing director of National Association of Estate Agents (NAEA), said falls in the levels of sales and enquiries were seen immediately after the referendum vote.

But he said a pick-up in activity has already started, and having spoken to the NAEA’s members across the UK, “generally there are good levels of activity and good levels of sales”.

Mr Hayward said there is now “more realism in the market”, adding “If a property is priced correctly, it will sell”.

He continued: “There is slight caution, but that caution has interest behind it. But it’s not so frenetic in terms of: ‘I need to do this quickly’.

“At least now, you have a little time to think about whether you want to buy a property - but we’ve still got a dire lack of stock on the market.”